ASX 200 for the week starting 22nd May 2017
I think our market is finally trending down There are three reasons to believe this:
- The index finished a the fifth wave up.
- The last move up was very weak: three days down with six days up and a small false brake.
- The move down is greater than 61.8% Fib retracement (taken from the low on Feb the 7th at 5582 to the high at 5956).
The low came on the blue trend line at 5697, and due to this fast move, a consolidation would be expected (banks are oversold).
So, how far could the consolidation go keeping the bear intact? I see two areas of resistance.
- This area is between 5770 (50% of the Fib range define above) to 5786 (61.8% Fib measured from the low at 5781 on 22nd of Mar)
- This area is between 5819 (50% Fib measured from the low at 5781 on 22nd of Mar) 5827-33, the previous high (the end of wave 3). This is a stronger resistance as a base of a head and shoulder formation.